National Housing Authority

March 25, 2009 BIR RULING [SH-(026) 237-09] 20 (d) RA 7279; S-20-092-99 National Housing Authority Quezon Memorial Circle, Elliptical Road, Diliman Quezon City Attention: Mr. Felicisimo F. Lazarte, Jr. Department Manager, Northern and Central Luzon Gentlemen : This refers to your letter dated March 14, 2007 as indorsed by the Regional Director, Revenue Region No. 7, Quezon City, stating that the National Housing Authority (NHA) engaged the services of R.R. Ricafort Construction for the land development of the NHA-PNP Macabulos Housing Project in Brgy. San Vicente, Tarlac City; that it is a socialized housing program intended for the members of the Philippine National Police (PNP) qualified under the Socialized Housing Program of the government; and that in support of your request you submitted to this Office the Contract you executed with R.R. Ricafort Construction and a Certification that the aforestated project is a socialized housing project intended for the underprivileged and homeless families belonging to the low and middle-income groups who are members of the PNP; and that you now apply on behalf of R.R. Ricafort Construction for VAT-exemption. In reply, please be informed that pertinent portion of Section 20 of RA No. 7279 reads: "Sec. 20. Incentives for Private Sector Participating in Socialized Housing. To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector. xxx xxx xxx "(d) Exemption from the payment of the following: xxx xxx xxx "(3) Value-added tax for the project contractor concerned;" In view thereof, R.R. Ricafort Construction, as a project contractor whose services are engaged by the NHA for the land development of the NHA-PNP Macabulos Housing Project is exempt from the payment of VAT on its gross receipts from the said project. However, its purchases of goods/articles shall be subject to VAT, even if the said purchases are to be used for the socialized housing project, since VAT is an indirect tax which can be passed on by the seller of the goods/services. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered as null and void. IDTSaC Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service